FHA 203K Mortgage - An Excellent Way To Buy A Home Needing Repairs!

FinanceMortgage & Debt

  • Author Al Hardy
  • Published April 7, 2010
  • Word count 658

FHA home loans that are insured through the Federal Housing Administration (FHA) are wonderful financing choices for any homeowner who desires to get a home or refinance their existing house loan. These financing options have low interest rates in most cases only require down payments of 3.5 percent! FHA loan requirements tend to be simple, therefore existing and prospective homeowners are more apt to be eligible for these loans than other kinds of loans. A FHA 203K Mortgage can be a great way to buy a home that needs repairs or even refinance home improvements on your existing home.

There is an exception to the FHA requiring a 3.5% down payment. The exception is the special "HUD $100 Down Payment Incentive." You can buy a HUD foreclosed home with only a $100 down payment. You can get more information on this special HUD $100 Down Payment Incentive Program by clicking on the links at the end of this article.

FHA 203K Mortgage Rehabilitation Insurance Program

The FHA has a special mortgage loan plan to assist homeowners who intend to make improvements or repairs on their home, but don't have the finances to do so. These mortgages are called FHA 203k Mortgages and may be used for either a purchase or even a refinance. There are a couple of forms of mortgages in this program, one loan is for repairs that cost less than $30,000 and the other mortgage is for repairs that cost over $30,000.

A Streamline FHA 203K Mortgage choice is also available to homeowners that are considering doing non-structural repairs or improvements. This particular mortgage loan involves a smaller amount paperwork and will be less costly. It enables a homeowner to finance up to an extra $35,000 into their house loan in order to make improvements to the home. An FHA home inspector or appraiser will be able to identify home repairs that have to be made.

How The 203K Mortgage May Be Used?

Despite the fact that there are a few limitations on what the FHA 203K Mortgage may be used for, there are numerous renovations and home repairs that the mortgage can cover. In general, included in this are modernizations, getting rid of safety or health dangers, making a home more accessible for those that have disabilities, or making a home more energy efficient. More precisely, the mortgage loan can be utilized for roofing, plumbing, flooring, painting, and modest remodeling plus much more.

FHA 203K Loan Requirements

There are several FHA 203K Loan Requirements along with this kind of financing. Homeowners used to need to spend at the very least $5000 on their home repairs to become eligible, but that requirement has been removed. Homeowners must get cost estimations from a licensed as well as insured contractor(s) in advance of signing the sales agreement. The full cost of the mortgage loan, such as the repairs, have to stay within the FHA 203K loan requirements for the county in that the home is located.

This FHA 203K Mortgage can't be used to flip houses, and also the homeowner must make use of the mortgage loan on the home in which they lives. The work being done on the home need to commence within 30 days from the loan closing. All work need to be concluded within six months to abide by the loan requirements.

If a homeowner would like to make repairs to their home and needs additional financing, this kind of funding may be the smartest choice. Most of the same eligibility standards used for standard FHA home loans applies to the FHA 203K Mortgage. The majority of loan providers require that the borrower have a credit score that is at least 620 to be eligible. To be eligible for the mortgage loan, certain energy efficiency standards, in addition to particular structural standards, have to be fulfilled.

This FHA 203K Mortgage might be excellent answer for homeowners who desire a better approach to finance home repairs and improvements while not using up their savings.

Click HUD $100 Down Payment for more information!

Learn more about buying HUD Homes For Sale click FHA 203K Mortgage.

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